Relief all round at Travelport after securing unanimous support to alter the terms of its PIK (payment in kind) loan, effectively giving the company until 2016 to repay its debts.
Travelport Holdings, parent company of Travelport Ltd, moved last week to extend the terms of its PIK loan to 2016, but needed 100% support from the holders of the loan.
Full backing by holders of the PIK loan was obtained on Thursday this week after an extension was granted on Tuesday 27 for another 48 hours.
Travelport Holdings also received resounding support from debt holders at the operating company level to the proposal put forward last week.
The unanimous approval ends any likelihood of Travelport Holdings being required to take drastic action to force through the plan.
If absolute agreement was not reached then Travelport Holdings was expected to take voluntary bankruptcy procedures (Chapter 11 in the US) in order to complete the transaction.
Such a move would not have affected operations at the Travelport Ltd level, with it being used purely as a mechanism to push the loan extension plan, but would have clearly been another unwanted (and major PR challenge) step in the company's ongoing attempts to get back on a more secure financial footing.
The recent flurry of activity to alter the PIK arrangements coincided with two major credit agencies downgrading their ratings for Travelport.
Moody’s was the first to come out in early-August, citing concerns over the PIK repayment schedule, followed by Standard & Poor’s in early September.
The original repayment schedule had the PIK loan maturing in March 2012.
In a statement, president and CEO Gordon Wilson says:
"We believe this support reflects the strength of our business and the confidence in our vision for the future of the company. With the consents obtained, Travelport Limited will continue to have the financial flexibility to execute our growth strategy.
"We remain focused on expanding and improving our product and technical platform and building on our position as one of the world's leading travel content aggregators and transaction processing providers."
NB: Travelport saga — Is private equity a savior or villain in travel?